First home buyer

kingy

kingy

Hi guys,

looking to buy my first investment property using the first home buyer grant. I lurk around the forum once a while and thought i could use some help.

My wife and I have about 250k saved up. earning about 120k combined. We're not sure if its best to invest on a house or an apartment. We were thinking of buying an apartment either in the city, pyrmont or north sydney areas. But ive been told best to buy land cause thats where the capital gain is at.

Im slightly confused as though whats the best option for me at the moment...

any help will be greatly appreciated!
 
kingy, last year I think it was, for the very first time in this country, units CG exceeded the CG of house & land. This is probably?? a statistical blip due to houses becoming more expensive and units therefore being more affordable.

Units still do have a land component. Buy what suits you. But some units and some houses then you have all your bases covered. :)
 
One should not be averse to buy units in a good area / or where demography consists of small nuclear families or single professionals who prefer living in units close to work. Houses in some of these areas may be very expensive and out of reach anyway.
 
hi guys,

im looking to spend about 600-700k on this... ive been advised to get off the plan apartments around 15-20km off sydney ie homebush area... saying they will pick up in value and rental is quite good... one of my mates bought a 1 bedder in the city on pitt st for 530k with a potential rent of $650pw! seems like a good investment!

i wont be intending in purchasing a PPOR in the future as im happy with my current place... so any future purchases will be for investment only... so im in a big dilemma...

option 1 - 550k 1 bedder with good rent of about $600-650
option 2 - joint venture with bro for a house 1mill+ with rent of about $650+?
option 3 - off the plan at somewhere close to the city like erskinevelle, st leonards, etc

or?? :|
 
kingy said:
... ive been advised to get off the plan apartments around 15-20km off sydney
Click to expand...
Who is advising you to buy OTP (off the plan)?? :confused:

kingy said:
ie homebush area...
Click to expand...
Whoever is advising you on area .....is, what's the word for it? ......incompetent at best and........oh geeze - just plain wrong. That's a FAIL. Homebush is oversupplied with units already. And on top of that you want to add the risks associated with OTP. :eek::confused:

kingy said:
saying they will pick up in value
Click to expand...
When?
kingy said:
and rental is quite good...
Click to expand...
Define "quite good".

kingy said:
option 1 - 550k 1 bedder with good rent of about $600-650
Click to expand...
Mmmmm, OK if the 1 bedder is over 50m2 floor area and strata fees are not over $1,000 per quarter. More info required.

kingy said:
option 2 - joint venture with bro for a house 1mill+ with rent of about $650+?
Click to expand...
JVs limit your ability to buy more as you are jointly and severally liable for the loan repayments. That rental yield sucks big-time.

kingy said:
option 3 - off the plan at somewhere close to the city like erskinevelle, st leonards, etc
Click to expand...
OTP works in a confirmed rising market, with a developer who does not go broke mid-project, where you still qualify for finance when it is built, where the finishes have not been varied by up to 15% as the contract allows for, etc etc.
This is like a plane crash. For a plane to crash it is never just one thing, but a series of things that need to occur in sequence for it to come down.
For you to make money OTP, every thing has to line up in sequence. While you are waiting for that to happen, I will have made some guaranteed money on existing property deals.

kingy said:
or?? :|
Click to expand...
They're are more and better options around than the ones you are considering here.
Cheers, Alan
 
Last edited:
kingy said:
hi guys,

im looking to spend about 600-700k on this... ive been advised to get off the plan apartments around 15-20km off sydney ie homebush area... saying they will pick up in value and rental is quite good... one of my mates bought a 1 bedder in the city on pitt st for 530k with a potential rent of $650pw! seems like a good investment!

i wont be intending in purchasing a PPOR in the future as im happy with my current place... so any future purchases will be for investment only... so im in a big dilemma...

option 1 - 550k 1 bedder with good rent of about $600-650
option 2 - joint venture with bro for a house 1mill+ with rent of about $650+?
option 3 - off the plan at somewhere close to the city like erskinevelle, st leonards, etc

or?? :|
Click to expand...

OTP in the current climate is pretty scary unless u have the CASH to complete the purchase...............or at best be ready to complete on a 50 % lend or so.

I do like Homebush per se, I went to the local Boys High School and grew up there, and most old stock walk up red or blonde brick units will do ok I reckon, as will house and land.

But, new unit stock will likely be hammered for a while yet, check out Strathfield Councils development stance , take a walk down parra rd............and have a look at the peripheral burbs...........there is plenty of new high density stuff coming on line, thus the supply demand equation wont be in your favour for many years. looooooooooong term im sure u will be fine but..............

Id suggest you could be well served by employing the services of a good buyers agent with many a run on the board( eg Alan who has posted here) to have a look at some high quality options with growth history.

ta
rolf
 
kingy said:
thanks for the input guys... i guess its back to the drawing board for me... any advice on location?
Click to expand...

Yes, always plenty of advice :)
In April 2010 (nearly 2 years ago now), John Edwards from Residex stated:
“Sydney units which are well-positioned (close to transport hubs) and more than a decade old look to me as if they are going to see the best growth. Having said this, avoid suburbs where there are significant volumes of new development taking place”.

We had been doing that for 18 months prior and have continued to this day, and the CG has been really good. ;)
 
Why do people look at sinking money into cheaply built blocks with poor transport links?

Give me a solid, older style small number of unit block on the lower north shore next to public transport links. Areas like Cremorne, Cammeray etc are always in demand and you can get some very good bargains at the moment. There is limited new development happening there. It's close to the city. Rents are pretty good. Strata fees tend to be lower (if it's to be rented out, why do you need to have a concierge?) and there is low vacancy.

Plus, building standards tended to be much better.
 
Ideo said:
Why do people look at sinking money into cheaply built blocks with poor transport links?
Click to expand...

Same thing happens in Melbourne with our endless suburban sprawl. Simple fact is that the people who buy these houses have no idea what a quality property is...
 
what are your thoughts on wollstonecraft and waverton? i know its not as busy or popular as neutral bay or cammeray but what are the potential in CG?
 
Hi Kingy

I'm a fan of these Lower North Shore suburbs for a no. of reasons and tend to suggest buyers stick to the older more well-located buildings with less of the "mod cons" that eat into your cash-flow (ie: pools, gyms, concierges, shared common rooms etc).

Try to look for a block that has more owner occupiers than landlords, is well-maintained and has a healthy sinking fund. Waverton and Wollstonecraft have performed admirably over the last 5 years, despite all the doom and gloom, only taking a slight dip last year with a median back to the low $600K's, a price that still gets you a decent 2 bed with parking.

If you're going to consider units for your price bracket, I'd also look at other areas including those with good transport links on the north side and the Inner West. Anywhere along the major train and bus routes but preferably in a quiet location are what tenants seek as well as owner occupiers. Also check out nearby Naremburn (walking distance to St Leonards station) good old Artarmon for value as well as further afield on the Epping line. There is a lot of choice for your dollar but at the end of the day you do need to make a decision on what and where to buy. Best of luck with your search :)
 
appreciate your great advice jacque... when you are talking about close to public transport... whats considered close? 1km or less? Naremburn seem to be quite a walk to St Leonard station... so im not sure whats an acceptible distance..
 
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